5 Stocks Under $10 Set to Soar

These under-$10 stocks look ready to trade higher from current levels.

One under-$10 stock that's starting to trend within range of triggering a near-term breakout trade is American Apparel (APP), which designs, manufactures, distributes, retails and sells branded fashion basic apparel products and clothing and accessories for women, men, children and babies. This stock has been destroyed by the bear so far in 2014, with shares down by a whopping 58%.

If you glance at the chart for American Apparel, you'll notice that this stock has been downtrending badly for the last three months, with shares dropping from its high of $1.45 to its recent low of 46 cents per share. During that move, shares of APP have been making mostly lower highs and lower lows, which is bearish technical price action. This stock also gapped down sharply recently from around 80 cents to 46 cents per share with heavy downside volume. That move has now pushed shares of APP into oversold territory, so any change in trend could spark a monster oversold rebound higher.

Traders should now look for long-biased trades in APP if it manages to break out above some near-term overhead resistance at 54 cents per share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 1.41 million shares. If that breakout kicks off soon, then APP will set up to re-fill some of its previous gap-down-day zone from March that started near 80 cents per share.

Traders can look to buy APP off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at 47 to 46 cents per share. One can also buy APP off strength once it starts to take out 54 cents per share with volume and then simply use a stop that sits a comfortable percentage from your entry point.